New data, comprising of the responses of over 14,000 landlords to a survey by mydeposits and Ome, has revealed that despite the overwhelming and unexpected challenges of 2020, landlords are ultimately positive about the sector and its future.
mydeposits in partnership with Ome, conducted the survey to gain a holistic view of the private rented sector and considered factors such as the relationship between landlords and tenants, challenges and changes in the market, the impact of the pandemic, regulation and government support.
Overall, contrary to the common misconception that landlords and tenants often clash, on average tenants rate their relationship with their landlord 7.4 out of ten. Agents and landlords are also overwhelmingly positive, with 60% rating their relationship with their tenant nine or ten out of ten.
Tenants’ views on whether renting offers value for money are split. 49% say it does not, citing that renting is overpriced, leaves them unable to save and is more expensive than a mortgage. For some, it is the only option as they cannot afford the initial deposit required to buy. The other half of tenants (51%) think renting does offer value for money owing to its flexibility and being absolved from maintenance costs – a view also shared by three quarters of landlords and agents. However, homeownership remains a long-term aspiration for two thirds (67%) of tenants with 51% identifying affordability as the main reason they rent.
Given the recurring issue of affordability for tenants, it is surprising that only six per cent of landlords, agents and tenants have used a deposit replacement service. Whilst 31% would consider trying a deposit replacement in the future, it seems there is a lack of understanding and knowledge around what deposit replacement options are and to date, this has deterred people from wanting to try them.
Rent arrears have always been a cause for concern for landlords and agents, and even more so during the COVID-19 pandemic. Despite reports of large-scale rent arrears, 95% of tenants said they are not in arrears due to COVID-19. Of those who have struggled, 58% said their landlord had been accommodating, with 31% offering reduced rent or a rent holiday. Conversely, 31% of landlords and agents said their tenants were in arrears due to the pandemic. Both landlords and agents also identified rent arrears as one of the greatest challenges in the rental market, as well as legislation.
The majority of landlord respondents (80%) have been in the buy to let sector for more than five years, with 65% feeling that the industry has changed for the worse for reasons predominantly linked to regulation, legislation and tax. These reasons have also led to 90% of landlords and agents feeling unsupported by the Government. Yet despite this, 79% still plan to remain landlords over the next five years.
More than half (51%) of tenants have only rented their current property or one other over the last five years, demonstrating tenants’ desire to remain longer in rental properties. Of those who moved more frequently, the most common reason is their job.
Suzy Hershman, Head of Dispute Resolution at mydeposits, said: “In spite of challenges faced including legislation, rent arrears, and evicting tenants, it is evident that the majority of landlords want to remain in the sector because it provides a good source of income and an investment for retirement, making it a worthwhile endeavour.
"From a tenant’s perspective, the cost of renting is a key factor for those with a negative outlook of the sector. It could be suggested that the high costs and affordability issues felt by tenants manifest as rent arrears for agents and landlords making the problem cyclical. However, renting is also providing a solution to those who cannot afford to buy whilst offering flexibility.”
Matthew Hooker, Co-founder of Ome, added: “The results of the survey have highlighted the strengths of the market and reinforces that the vast majority of tenant-landlord relationships remain positive. From a deposit perspective, it is encouraging that so many people are open to new models and we look forward to building upon our early growth, as well as building upon our innovative work with new and exciting offerings over the next few years.
"As we emerge from the pandemic and the Government gets back on track with making further changes to the landscape of the private rented sector, our sentiment surveys will provide valuable insight into the views of landlords, tenants and agents and what changes could have a positive impact on reducing the challenges faced by all parties.”